The Vatican issued the warning through its official newspaper, L'Osservatore Romano, in an article headlined "Hallowe'en's Dangerous Messages".

The paper quoted a liturgical expert, Joan Maria Canals, who said: "Hallowe'en has an undercurrent of occultism and is absolutely anti-Christian."

Now there is a fellow named Fr. Joan Maria Canals, CMF, a liturgy official with the Spanish Bishops’ Conference who has been pushing the idea that as Spain appropriates this U.S. holiday it ought to do so in a life affirming way as opposed to celebrating the occult and death. Catholic News Agency wrote about that effort and similar efforts in France and Chile. I expect L’Osservatore wrote a similar report. I’m certain the Pope didn’t comment in the article. Unfortunately, L’Osservatore does not archive their articles, so the first sensational or misrepresentative press piece about any article in L’Osservatore becomes the source – no other source being available.

Then it descends from there. One Spanish priest is quoted in L’Osservatore and soon enough, The Daily Mail blares the headline:

The Mail’s original article has been significantly altered so as to remove the false references to the Pope it originally contained. If you click through, you’ll notice they also toned down the headline. But too late, the American press has picked up on it and is running. We’ve had press inquiries from local affiliates here wanting explanations as to why the Pope is condemning Halloween and what we’re going to do about it.

I think there are two lessons here:

1. If your going to re-report on what another news organization has reported, you should check their sources.

2. If you’re going to be a news source as significant as the Vatican’s newspaper, your articles shouldn’t disappear after 24 hours.

UPDATE

The Times (U.K) takes the cake, combining the aforementioned sensationalism with the ignorant anti-Catholicism now apparently commonplace in England. I lived and worked in London 97-98 and didn't notice much anti-Catholicism, but things must have changed. The article begins, my emphases:

When Victoria Romero, 6, dressed up as a witch for a Hallowe’en party this week she could hardly have imagined that she was provoking the wrath of God by attending a celebration akin to a Black Mass — at least in the eyes of the Vatican and the Roman Catholic Church in Spain.

Wearing skeleton suits, dressing up as vampires, witches or goblins or slapping on fake blood is not far removed from communing with the Devil, according to the country’s bishops.

However, the bishops, with Vatican backing, have reserved their venom for the millions of parents who allowed their children to celebrate this “pagan” festival.

Later in the story we find the sole basis for the charge of Vatican venom against millions of parents:

“Children dress as witches, vampires, ghosts, masks, corpses, skeletons, and parents favour this type of festivity which plays with elements of death,” Father Canals said. “But when a relative dies they prevent them from seeing the dead relative.”

So a very mild and probably true cultural observation by a priest in Spain, when quoted by L'Osservatore, translates to Vatican venom against millions of parents.